Sustainable Finance
Disclosure Regulation
The Sustainable Finance Disclosure Regulation (SFDR) introduces environmental,social and governance (ESG) disclosure standards for financial market participants,
advisors and products.

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These standards have been developed under the EU regulation onsustainability-related disclosures in the financial services sector and aim to:− Strengthen protection for end investors− Improve disclosures to investors from a broad range of financial market participants
and financial advisors− Improve disclosures to investors regarding financial products− Ensure transparency and easy comparability of products
The SFDR empowers the European supervisory authorities to develop regulatory
technical standards (RTS) governing the content, methodology and presentation of
ESG disclosures at both an entity (firm) level and a product level.
At entity level, principal adverse impacts (PAIs) that investment decisions have on
sustainability factors should be disclosed on the entity’s website. At product level,sustainability characteristics or objectives of financial products, as well as how aproduct based on sustainable investments complies with the do no significant harm
(DNSH) principle, should be disclosed.
SFDR effectively implements a tiered categorisation of financial products:− Article 6 – financial products without ESG or sustainable investment preferences− Article 8 – financial products promoting environmental or social characteristics− Article 9 – financial products with the objective of “sustainable investments”(including the specific subset with a reduction in carbon emissions as an objective)− Others – other financial products which do not fall under Articles 6, 8 or 9Sustainable Finance Disclosure Regulation3

Who is affected
SFDR applies to financial market participants and financial advisors with disclosure
requirements at both entity and product levels. It is intended to apply to most financial
products marketed to the EU, including those managed by non-EU firms.

What are the implications
Institutional investors and asset managers in the EU now have disclosure obligations
around ESG factors.
Market participants must disclose:− Sustainability risk policies on investment strategies− Adverse sustainability impacts− Remuneration policies consistent with sustainability risk integration

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How can LSEG help?
The dataFunds

Based on the draft RTS published in February 2021, LSEG has solid coverage
across the PAI indicators in the three tables. We have consulted the guidelines
provided in Annex 1 to ensure we align with how we capture our own data points;
anything that doesn’t match the required definition is either classed as a partial
match or no match.

We provide SFDR metrics within the Lipper funds database to determine whichfunds are classed as meeting SFDR criteria.

Totalindicators

Directmatch

Partialmatch

NomatchTable 1 (Mandatory): Principal
adverse sustainability impacts
statement

18142

2

Table 2 (Opt-in): Additional
climate and other environmentrelated indicators

221075

Table 3 (Opt-in): Additional
indicators for social andemployee, respect for humanrights, anti-corruption andanti-bribery matters

241761Grand total

64

41

158

*Subject to change based on LSEG data coverage.

Based on the final regulatory text and requirements, LSEG will cover any datagaps for the mandatory indicators first and evaluate coverage requirements for theremaining opt-in tables.
Find full details in the SFDR – principal adverse impact indicator coverage

This functionality is available within LSEG Lipper for Investment Management
in both Eikon and Workspace and allows you to run reports, compare specificdata points across funds and benchmark performance and attributes against
competitors, based on SFDR flags across Articles 6, 8 and 9.
Within the LSEG suite of products you can retrieve fund data, filter down to theuniverse you are interested in (including SFDR article criteria) and view which article
the fund relates to.

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Solutions
Desktop
Company profiles
Within a company profile you can view details about your chosen company on SFDR
tables 1, 2 and 3, allowing you to perform audits at the company SFDR indicator level.
The SFDR view provides details on the four closest peers by market capitalisation
across country or industry, giving you a better view on a company’s performance andallowing you to click through to the original source for each data point.

SFDR view in Company Profile app5

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Portfolio analytics
The SFDR template in the Portfolio Analytics app in Eikon and LSEG Workspace provides
portfolio-level aggregation of the RTS Level 2 metrics based on the Annex 1 guidelines
for both the current and previous year.
Since company reporting on the given indicators varies in availability, we offer two
options for missing data to help with best effort. The first uses calculated estimates byproviding the LSEG Business Classifications industry group level medians for securities
in the portfolio that do not have disclosed data. Statistics will be provided to help
explain what percentage of each metric was based on reported versus estimated.
The second option allows customers to request information from a company that has
not disclosed certain metrics and allows the company to provide this data via the LSEG
contributions tool.

SFDR template in Portfolio Analytics app

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Feed
Additionally, LSEG offers a feed solution consisting of company-level data suchas ESG, financial fundamentals and business sector information (LSEG BusinessClassifications). Sovereign-level information covers greenhouse gas (GHG)
emissions and many other metrics, as well as fixed income data. The feed isavailable via Datastream Data Loader and includes all raw data needed to performthe calculations for each metric.
The feed comes with redistribution rights to disclose the outcomes of the metrics
calculations on websites and in compliance with the periodic and pre-contractual
disclosure requirements.
The SFDR article flags are also available via the Lipper Global Data Feed and via
API, allowing you to ingest SFDR fund data into your investment decisions, analysis
and models.

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